R&D Tax Credits
The research and development tax credit applies to many types of businesses. This is a dollar-for-dollar credit against taxes owed or taxes paid. It is a nonrefundable business credit that can be carried back 1 year and forward 20 years. A business can take the credit for all open tax years, which is the last three years and the current year. The amount of the credit is heavily based on wages, supplies and gross receipts. Below are activities that can qualify as R&D tax credits:
- Developing, engineering or designing a new product, process, formula, software, technique, etc., whether or not successful
- Designing or evaluating product alternatives
- Designing, constructing and testing preproduction types and models
- Engineering activity to advance the product’s design to the point of manufacture
- Improvements in function, reliability and quality to existing products and improving existing processes, formulas, software, techniques, etc.
- Green initiatives, waste reduction
- Switching vendors and working with mechanics of materials
- Coding machinery or internal use software
- Testing for quality certification
- Designing dies, molds, tools and jigs
- Purchasing new equipment
- Paying outside consultants/contractors to do any of the above activities
We offer a free feasibility analysis to see if the R&D credit would be beneficial to your company. We help you identify qualifying activities, assist you in properly documenting costs associated with those activities and provide a method of arriving at those costs. If interested in this free analysis, please contact us.